Wall Street banks see pockets of weakness from market turmoil
XLF•Major U.S. banks reported softer investment banking and trading activity late in the third quarter as market turmoil weighed on dealmaking. JPMorgan’s markets revenue rose 15% year over year, including a 49% increase in equity markets revenue, while Goldman Sachs’ fixed income, currency and commodities revenue fell 1%.
1. Late-quarter slowdown
JPMorgan Chase and Wells Fargo said market volatility and economic uncertainty slowed activity in September, while Citigroup reported softer investment banking activity after record first-half volumes. JPMorgan executives said its investment banking pipeline remained strong and characterized deals as more likely delayed than canceled.
2. Trading results diverged
JPMorgan’s markets division revenue climbed 15% from a year earlier in the third quarter, with equity markets revenue surging 49%. Goldman Sachs beat profit estimates as dealmaking remained steady and volatile markets lifted equities revenue, while its fixed income, currency and commodities revenue declined 1%.
3. Market uncertainty weighs
Executives cited the bond-market selloff, higher yields and equity volatility as factors interrupting corporate dealmaking. Analysts said the IPO market remained selective, and delayed offerings could still launch in the fourth quarter if conditions stabilize.
